Usage and Consumption of Electricity in India – Industrial, Agriculture, Domestic

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The growth in the Indian economy has seen a rapid rise in the demand for power from all segments. While the rapid industrialization demands a large share of electricity, the domestic as well as the agriculture sector have not been left far behind. Infact if one studies the trend; there is almost a similar percentage growth in the demand for electricity in India from both the domestic as well as the industrial sectors.

Industrial demand for electricity in India:

Industrialization always has a high demand for power. It is the largest consumer of power in India. With India emerging as an IT/BPO hub and a lot of process automations are taking place. As the economy in India is in a growth mode, there has been an added pressure from the industrial segment for more power. Unlike other segments, power directly adds on to the cost of productivity. In many cases the erratic supply leads to inefficiency and subsequently the quality of production. Also there is an opportunity cost involved during the non-availability of electricity. With electricity generation in India much lower than the demand, the consequent power cuts and erratic power supply disrupts the production cycles of manufacturing industries. Peak hour shortages severely disrupt the production cycle causing huge discrepancies in production and operations management. Power thefts and low quality of power supply make the situation in the power sector even worse.

The situation at present is such that manufacturers are willing to pay more for a regular supply of electricity. Such a premium for consistent supply of electricity would be readily accepted throughout. However, the problem faced by these industries is not the price, but the availability of electricity it self. With the demand far outstripping the electricity generation in the country, a lot of industries are now looking at alternatives.

The solution as envisioned by a lot of organizations is to setup captive power plants for electricity generation or high capacity back-up generators. Both these options are expensive for industries and require heavy investment. However by being off the grid and having the freedom to generate electricity for their own usage, the industries seek to control the losses due to the inconsistent supply by the Indian power sector.

Agricultural demand for electricity in India:

Despite rapid industrialization, agriculture still forms a major contributor to the Indian economy. With the economy progressing and a lot of mechanization being done in agricultural practices, the demand for electricity among this segment has also increased. With farmers slowly moving out of traditional practices to increase productivity as well as efficiency of farming operations, the share of mechanical and electrical operation sin agriculture has doubled from 1970 to 2003. If one compares all the segments, the demand by the agricultural segment is almost as much as that by the industrial segment.

One of the most important and energy drawing operation happens to be that of irrigation. More than a third of the electricity used by the agricultural sector happens to be for drawing water into the fields. This operation assumes even more importance during farming of the kharif crop. Summer farming requires intensive amount of irrigation and any loss of power supply would severely affect the crop.

With rural areas making to do with only 4-5 hours of electricity during summers, there is a large fall in the output from the fields. Use of electrical equipment is not possible leading to slower and inefficient output. There is also a lot of wastage. With refrigeration not possible during power cuts, storage of perishable items becomes difficult. As a result traders often face losses.

Domestic demand for electricity in India:

The growth in the Indian economy has lead to a change in the lifestyle of the people. People today have more disposable income. As a result a lot of this income is spent on time saving appliances. Washing machines, micro-waves, refrigerators which were at one point of time luxury items are now must haves. The Indian consumer market is still to catch onto the trend of energy saving appliances. Also recent climatic changes have lead to the purchase of artificial cooling devices. All of this adds on to the demand for power.
The increasing spending power of the consumer has also lead to a retail boom. There is a proliferation of malls, supermarkets, and theatres etc which draw a lot of electricity. New age stores and entertainment options also put a lot of demand on the power sector.

The domestic demand has also increased due to the huge influx of people migrating into cities and satellite towns. The increase in demand is further pushed by the trend of nuclear families resulting in more number of power consuming domestic units.

The demand in the domestic segment tends to increase during summers. The outages that occur have two reasons. The heat leads to large scale use of cooling devices drawing more and more power from the grid. At the same time, rivers drive up reducing the power generating capacity from hydro-electric power stations. With the demand going up and supply going down, the situation in summers tends to be with a lot of power cuts.

Indian festivals also see a large number of power drawing decorations at homes as well as in malls, shops and multiplexes leading to a sudden surge in the demand for electricity.

While the usage trends differ across segments, the tariffs are lower for the agricultural and the domestic units than the industrial units. The higher costs for industrial units are done to subsidize power for domestic and agricultural consumers. But this does not reflect true value of production leading to revenue losses for power plants in many states in India.

The need for the power sector to buck up:

Despite the differences in the trends of usage all three segments have to face the brunt of shortage of electricity generation in India. With demand rapidly increasing from all three fronts there is a very urgent need to fill the gap as soon as possible.

For a detailed report on electricity in India, please refer

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